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Dispute over Paristown lot promised to two developers to cost city $150K in settlement

A dispute over a Paristown Pointe lot promised by Louisville Metro Government to two different developers has led to settlement agreements that could come with a $150,000 price tag for taxpayers.

The plan, which avoids lawsuits threatened by the groups, was sharply criticized Tuesday by council members who accused the city's economic development team of failing to responsibly navigate the deals.

"The reality is this is a large rock that we're forced to swallow," said Councilman Brent Ackerson, D-26th District. "And we ought to be honest with the public about what's taking place here, and hopefully it will serve as a guidepost (so) this sort of pathetic waste of government resources and money does not happen again."

That plan can only go through if Metro Council approves a resolution to declare the property as surplus.

It was praised in a joint statement from Louisville Metro Government and The Marian Group, one of the parties that expected to develop the lot, as "the best outcome" to avoid costly legal proceedings.

The city chose The Marian Group in 2017 to develop the roughly 2-acre lot in Paristown Pointe, as the first part of a larger mixed-use development at the site of the old Urban Government Center.

The Marian Group planned to build 22 modern shotgun homes on the vacant lot at 814 Vine St. — which had angered some neighbors because it marked an increase from original projections of 12 shotguns.

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That lot, however, was also part of a prior lease agreement with the Paristown Preservation Trust, which secured the land for parking at the Kentucky Center for the Arts' new music venue, Old Forester's Paristown Hall.

The Paristown Preservation Trust's agreement, which ran for 24 years, was reached in February of 2017 and the development group planned to use the land for 271 parking spaces.

The city tried to get out of its lease with Paristown Preservation Trust by offering it alternative parking options earlier this year, per the agreement, but it objected. To avoid lawsuits, the city agreed to settlement agreements earlier this month.

Under that negotiated deal, the lot will be for the music venue's parking lot, as originally planned. And The Marian Group will get a total of $650,000 to cover its costs in improving the property, which is to include $150,000 from Louisville Forward and $500,000 from Paristown Preservation Trust.

The council's labor and economic development committee narrowly voted to table the measure on Tuesday, meaning a full council vote can't happen for at least another three weeks and the city will likely be forced to request an extension of the agreements.

After the vote, the resolution's sponsor, Councilwoman Barbara Sexton Smith, D-4th, said the committee had "exercised its power and authority to protect the public interest."

Council members "made it abundantly clear that we are not going to be held hostage by a set of potential settlement agreements if the Metro Council has not been able to fully explore all possibilities and guarantee sound fiscal management," Sexton Smith said.

Ackerson, who called the situation a "royal financial shellacking" for the city, pushed for tabling in order to get the language right.

Council President David James, D-6th, said the city had "failed on this particular mission," adding that Louisville Forward, the city's economic development agency, hadn't done a good job.

"I hope that we look forward to this as being a learning lesson and we don't make such huge mistakes again, because it is the taxpayer dollars that are suffering here," he said.

The city's $150,000 contribution would come from money left over in Louisville Forward's fiscal year 2018-19 budget, officials said, meaning none of the funds will come from the city budget approved last month.

Still, council members raised concerns about spending taxpayer dollars that could have gone toward city services or retaining Louisville Metro Government personnel on the settlement.

"When we cut your services, when we close your pools, when we cut your library hours, these are dollars could've gone ... to that," Ackerson said. "That money, rather than going to serve you, is going to settle a lawsuit."

"... We need to acknowledge this is a huge mistake that's taking place. And we need to own it," he later added.

Sexton Smith said she'd been informed by the Jefferson County Attorney's Office that if the city hadn't reached a settlement agreement, the lawsuit process would've taken a minimum of two years and could exceed $1 million in damages.

Work on the larger lot in connection with the Urban Government Center project continues, a Louisville Forward spokeswoman said Tuesday.

The city filed a rezoning request for the 9.25-acre mixed-use development earlier this month, planning documents show.

In a joint statement, the city and The Marian Group said city officials asked Marian to consider stepping aside from redeveloping 814 Vine St. when Metro Government was "faced with the threat of litigation."

Marian agreed, the statement said, "in the interest of the greater good and in support of the Paristown neighborhood, Louisville Metro and the Kentucky Center for the Performing Arts."

The "agreed upon compromise was the best outcome to ensure that the benefits of both projects were not delayed or negatively impacted by costly legal proceedings," it added.

The lot is valued at $88,010, which officials said is a very conservative estimate given the development surrounding it. The Paristown Preservation Trust will pay $500,000 for the option to purchase the property, under the agreement, all of which will go to The Marian Group.

Paristown Pointe is bounded by East Broadway, Barret Avenue, Breckinridge Street and the railroad track along South Fork Beargrass Creek. Roughly $30 million in redevelopment dollars has been poured into the tiny neighborhood in recent years.